In technology, the odds of making something truly new and popular have always tilted toward failure. That was why Mervin Kelly, the president of Bell Labs, let many members of his research department roam free, sometimes without concrete goals, for years on end. He knew they would fail far more often than not.

But what was the secret of success? Just because you had made something new and wondrous before didn’t mean you could make something else new and wondrous. Bell Labs, however, had the advantage of necessity; its new inventions, as one of Kelly’s deputies, Harald Friis, once said, “always originated because of a definite need.” In Kelly’s view, the members of the technical staff had the great advantage of working to improve a telephone system where there were always problems, always needs.

Sometimes innovations sprang from economic needs—making something cheaper, for instance, such as a long-distance phone call, by efficiently combining many different conversations on a single cable, interleaving them at different frequencies or at different time intervals (or both), and then pulling apart those conversations at the receiving end. Sometimes innovations sprang from operational needs—making something that worked better and faster, such as direct dialing so subscribers wouldn’t need to use an operator to complete a phone call. Sometimes, innovations sprang from cultural necessity—making something that appealed to an evolving society, such as a new Bell product in the 1940s like the car phone. And sometimes innovations sprang from military necessity—an invention such as radar or automatic anti-aircraft guns, which were urgent for national defense.

To innovate, Kelly would argue, his labs required the smartest people—and it needed a lot of them, so as to foster explosive ideas. What’s more, to stay creative, his Labs needed to further the education and abilities of its promising but less accomplished employees, not for reasons of altruism but because industrial engineering had become so complex by the late 1940s that it required men and women who were trained beyond the level of America’s graduate schools. In 1948, Bell Labs began offering a series of unaccredited but highly challenging courses for employees known as the Communications Development Training Program, or CDT. But nobody at Bell Labs really called it CDT. The program was informally known—much to Mervin Kelly’s discomfort—as “Kelly College,” because that’s what it was.

There were other ingredients for innovation, too. Bell Labs needed to house its critical mass of scientists and engineers close to one another so they could exchange ideas; it also needed to give them all the tools they needed. Some of these tools took the form of expensive machinery for the laboratories. Some tools were human, however. Bell Labs employed thousands of full-time technical assistants, some of whom had only high school diplomas but were dexterous enough, mentally and physically, that PhDs would often speak of them with the same respect they gave their most acclaimed colleagues. The TAs, as they were known, formed a large subculture—a stratum parallel to the one formed by the Labs’ esteemed scientists—where they would exchange valuable information among themselves over lunch. “They were the keepers of practical information,” John Rowell, an experimental physicist, recalls. “They knew secrets, tricks. And they knew all this lore about what had been done in the early days.”

Bell Labs required a stable stream of dollars. “Never underestimate the importance of money,” the Nobel-winning physicist Phil Anderson says—and it was true. Being a part of the phone monopoly meant that Bell Labs had ample funding. Plans could thus be made for the near term as well as for the far future—five, ten, and even twenty years away.

Finally, something else seemed crucial to the Labs’ innovative efforts. “A new device or a new invention,” Mervin Kelly once remarked, “stimulates and frequently demands other new devices and inventions for its proper use.” Or to put it another way, the solution to a technological problem invariably creates other problems that needed solutions. So making something truly new seemed to ensure that you would be making something else truly new before too long. The only trouble was, this rule suggested that your competitors—that is, if you weren’t a regulated monopoly like AT&T, and actually had competitors—could do the same.